Seeking Alpha

Herbalife receives notice of FTC inquiry

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Comments (51)
  • toddyogi
    , contributor
    Comments (200) | Send Message
     
    Probably the last best chance for shorts to cover.
    12 Mar 2014, 01:50 PM Reply Like
  • Dampflok
    , contributor
    Comments (973) | Send Message
     
    If you are still long, you are a designated bag holder.
    12 Mar 2014, 01:57 PM Reply Like
  • powershake
    , contributor
    Comments (1878) | Send Message
     
    So are you a short bag holder as Ackman?

     

    Price down 7% today - not too bad considering the news. HLF response "We welcome the investigation to clarity misinformation." FTC isn't involving all MLM's - so like the Belgian Court decision HLF will come out in full compliance of the law, imo.
    12 Mar 2014, 06:02 PM Reply Like
  • barmen
    , contributor
    Comments (156) | Send Message
     
    i made a deal to sign new member tomorrow :)
    12 Mar 2014, 08:13 PM Reply Like
  • JimboWHO
    , contributor
    Comments (82) | Send Message
     
    His work on HLF is exhaustive and his logic is accurate, IMHO.

     

    JJM
    12 Mar 2014, 01:56 PM Reply Like
  • fuzzymc
    , contributor
    Comments (176) | Send Message
     
    Mr Ackman may have finally found the right congressman to buy to get an inquiry!
    12 Mar 2014, 01:59 PM Reply Like
  • jmj858
    , contributor
    Comments (101) | Send Message
     
    Finally some definitive action on the part of the regulators. Let's hope they do their job quickly and judiciously to finally get the Ackman nonsense behind us.
    12 Mar 2014, 01:59 PM Reply Like
  • jzheng220wz
    , contributor
    Comments (132) | Send Message
     
    shorts better cover now
    12 Mar 2014, 02:01 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (5925) | Send Message
     
    As I wrote in the past: Ackman is willing to run the entire marathon, he held his short positions on MBIA for years and he will do the same in HLF. This stock is toxic at these levels, too much legal risk (and the going private/LBO option so far has been a bluff from the long side).

     

    On the other hand, retail investors often don't have the same long timeframes so I wouldn't got short either (except with a little play money).
    12 Mar 2014, 02:04 PM Reply Like
  • rubiconrich
    , contributor
    Comments (244) | Send Message
     
    Ackman should be investigated by the SEC. If this is what takes to "buy influence" ... shameful
    12 Mar 2014, 02:05 PM Reply Like
  • c5966
    , contributor
    Comments (130) | Send Message
     
    Investigated by the SEC for what?! Because he's a billionaire?
    12 Mar 2014, 03:17 PM Reply Like
  • ash187
    , contributor
    Comments (222) | Send Message
     
    "How many sales are outside herbalife distributors"
    "I'd say greater than 90"
    "Its above 70%"
    "We don't track that number because its immaterial"
    'We welcome the FTC investigation to clear up the misinformation about our company"
    "Heres another useless PR piece about how we're the best nutrition provider in South Ossetia and Abkhazia"

     

    Let's not say we didn't see this FTC investigation coming.
    12 Mar 2014, 05:04 PM Reply Like
  • Kay Herbert
    , contributor
    Comments (1093) | Send Message
     
    Reportedly they were "surprised" about the investigation, but it's all good because "Herbalife welcomes the inquiry given the tremendous amount of misinformation in the marketplace"
    12 Mar 2014, 05:47 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (5925) | Send Message
     
    ""How many sales are outside herbalife distributors"
    "I'd say greater than 90""

     

    And if the numbers were really that high: Why doesn't HLF simply sell their product in stores? Wonder how that would work out for revenue, margin and the stock price. That's why they continue their MLM scheme.

     

    The new Pershing presentation on China and the following Q&A (at the end of the webcast) looks convincing to me:

     

    http://bit.ly/1etRH4l
    12 Mar 2014, 10:00 PM Reply Like
  • User 6461431
    , contributor
    Comments (851) | Send Message
     
    Based on the stories I have read, and the statements from various officials, I think HLF was surprised that a reporter was aware of the investigation before they were notified of the investigation by the FTC. This suggests that their is a leak within the FTC, the question is whether the leak happened several weeks ago, and whether Ackman was aware of the announcement of the investigation and timed his China presentation to correspond with the announcement, or whether it is all just a big coincidence.
    13 Mar 2014, 07:07 AM Reply Like
  • rubiconrich
    , contributor
    Comments (244) | Send Message
     
    Does GNC track customers with name, address, price,... at the retail level...does Coca Cola... how about Weight Watchers? The answer is NO.. why not???.. because it is immaterial...
    I have been selling Herbalife for 20 years, and am sure I will be getting a request for retail slips from the company anyday now. All it really means to me is more paperwork.
    I sell over $5,000 a month retail/wholesale.... over 95% being retail wholesale... has been that way for years
    13 Mar 2014, 10:46 AM Reply Like
  • rubiconrich
    , contributor
    Comments (244) | Send Message
     
    There was the huge increase in puts a few weeks ago, days before the Markey letter,... more insider trading..... more scandal.... nothing has been done about it yet..
    With Ackman, nothing is by coincidence
    13 Mar 2014, 10:50 AM Reply Like
  • toddyogi
    , contributor
    Comments (200) | Send Message
     
    When the FTC gives HLF a clean bill of health (again) or comes up with some minor issues and a fine, will that be "the ends of the earth" for Ackman, or will he continue to mislead his investors and followers?
    12 Mar 2014, 02:10 PM Reply Like
  • jmj858
    , contributor
    Comments (101) | Send Message
     
    His investors will leave in droves.

     

    "You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time." - Abraham Lincoln
    12 Mar 2014, 02:18 PM Reply Like
  • Kay Herbert
    , contributor
    Comments (1093) | Send Message
     
    "When the FTC gives HLF a clean bill of health"
    Now where did I read that before ... mmmh.. oh ya, in every scam that the FTC investigated.
    BTW the FTC does not give "a clean bill of health" to anyone - no gold medals - no slap on the back, and they don't investigate companies for being "great" or "compliant with the law"
    12 Mar 2014, 04:15 PM Reply Like
  • User 6461431
    , contributor
    Comments (851) | Send Message
     
    "the FTC does not give "a clean bill of health" to anyone ..."

     

    No, but right now they are requesting documentation from the company. They will likely conduct some interviews or hearings with Herbalife to answer any questions that they may have. The FTC likely felt pressure to do something as they were getting heat from Congress and trade groups.

     

    Possible outcomes (in no particular order):
    1) The FTC finds that HLF is running a pyramid scheme and the company is shut down.
    2) The FTC finds that HLF is in violation with some minor laws, and after implementing corrective action, the company is fined and the investigation is over. No action is taken on the pyramid scheme accusations (because the FTC found no evidence of HLF operating as a pyramid scheme)
    3) The FTC completes its investigation having found nothing wrong, and says nothing. Lack of action by the FTC is essentially a clean bill of health.

     

    Outcome #2 is the most likely. They will probably get hit with a fine for letting the lead generation business go one for so long, but as they have clamped down in that area they will likely just see a financial penalty.
    12 Mar 2014, 11:44 PM Reply Like
  • Dampflok
    , contributor
    Comments (973) | Send Message
     
    User6461431, what is your interpretation of a "minor law", or what might be a major law in comparison? I am tired of bagatellizing Herbalife's way of trying to stretch the legal blanket.
    If found guilty, a number of top people and those that benefitted greatly from the scheme will be liable to criminal prosecution. Thats not a minor thing! Heard of the Racketeer Influenced and Corrupt Organizations Act?
    13 Mar 2014, 07:18 AM Reply Like
  • User 6461431
    , contributor
    Comments (851) | Send Message
     
    Dampflok: Poor choice or words on my part.

     

    I think we can all agree that if HLF is found guilty of operating a Pyramid Scheme, the penalties would be severe, the government would likely freeze asserts, and the company would likely cease operations in the US, and corporate leaders would be banned from running specific types of companies. That is what I meant by a major law.

     

    Now, if the FTC completes an investigation and finds that some internal policies or oversight were not up to par, or perhaps HLF did not take action quickly or severely enough to stop the lead generation business, or misleading product/income claims, that would be my interpretation of a minor law. The FTC and HLF would both come to the table to discuss the findings, and they would likely settle which might involve a fine against the company, mandate some procedural changes, or increase surveillance of the company for a period of time, but the company would remain in business with only minor changes to its operations.
    13 Mar 2014, 11:35 AM Reply Like
  • loufah
    , contributor
    Comments (274) | Send Message
     
    The results of the FTC inquiry won't be the end for Ackman. He has said that if HLF is found to be compliant with existing laws, he will try to get the laws changed.
    17 Mar 2014, 07:30 AM Reply Like
  • User 6461431
    , contributor
    Comments (851) | Send Message
     
    And such a process could take many many years, is subject to comment and feedback from the public (including Herbalife and other MLMs), and may require an act of congress to create new laws if the FTC can not accomplish what Ackman wants them to do under its current laws. Additionally, if the laws are changed, companies will be given time to comply with the new laws, and Ackman would have to launch a new campaign to demonstrate that Herbalife is not in compliance with the new laws and get regulators to step in and stop the practice if it is indeed illegal. If the FTC takes little or no action, Ackman is done.
    17 Mar 2014, 09:09 AM Reply Like
  • JimboWHO
    , contributor
    Comments (82) | Send Message
     
    If HLF can withstand the scrutiny of FTC exam so be it. Ackman has only so gotten done what Harry Markopolos couldn't in another famous case. It is neither a crime nor dishonorable to be on the side of the innocent citizenry.

     

    Hats off to Bill.

     

    JJM
    12 Mar 2014, 02:12 PM Reply Like
  • fuzzymc
    , contributor
    Comments (176) | Send Message
     
    I don't think anyone makes you buy Hlf the stock or the product, personal responsibility may be applied!!
    12 Mar 2014, 02:30 PM Reply Like
  • barttart
    , contributor
    Comments (53) | Send Message
     
    Ackman will lose 100%
    12 Mar 2014, 02:17 PM Reply Like
  • Clark Zhao
    , contributor
    Comments (28) | Send Message
     
    wow crazy price drop. Is there any stock related to Herbalife?
    12 Mar 2014, 02:17 PM Reply Like
  • Rope a Dope
    , contributor
    Comments (663) | Send Message
     
    The Lead Balloon Company.
    12 Mar 2014, 02:20 PM Reply Like
  • chopchop0
    , contributor
    Comments (3998) | Send Message
     
    The disparate opinions on this thread are why I don't touch battleground stocks like this. Either the longs or Ackman is right, and someone is going to get hosed badly :)
    12 Mar 2014, 02:47 PM Reply Like
  • jmj858
    , contributor
    Comments (101) | Send Message
     
    Investing involves risk/return analysis coupled with probabilities based upon one's own knowledge and experience. In this case, both the risk and the potential returns are high but the probabilities are decidedly one-sided. Once the uncertainties are removed, the knowledgeable and experienced side will decidedly profit.
    12 Mar 2014, 03:16 PM Reply Like
  • Herbalifestudy
    , contributor
    Comments (185) | Send Message
     
    Will be interesting! Can't be much about HLF that FTC does not already know about
    12 Mar 2014, 02:52 PM Reply Like
  • mhmiles
    , contributor
    Comment (1) | Send Message
     
    HLF collects records of all sales but they have never been inspected. They'll give away pretty quickly if the sales are to actual end users or just loading onto new distributors.
    12 Mar 2014, 03:02 PM Reply Like
  • 50 cent it is
    , contributor
    Comments (1461) | Send Message
     
    High drama
    The plot thickens Ackerman thickens
    12 Mar 2014, 03:26 PM Reply Like
  • 50 cent it is
    , contributor
    Comments (1461) | Send Message
     
    If Ackerman knew this was coming,he had inside information.i wonder if he traded with that insider knowledge
    That would be criminal
    12 Mar 2014, 03:35 PM Reply Like
  • Ajayyy
    , contributor
    Comments (331) | Send Message
     
    So you think that Ackman has been holding a short since Dec 2012 for almost 15 months because he had inside information that FTC would investigate HLF in March 2014?
    12 Mar 2014, 04:12 PM Reply Like
  • Ajayyy
    , contributor
    Comments (331) | Send Message
     
    If anything, he is the reason that this investigation has been initiated in the first place.
    12 Mar 2014, 04:13 PM Reply Like
  • Ben Hanson
    , contributor
    Comments (520) | Send Message
     
    He certainly made a detailed case for it. I have no position myself, but I thought he made some sense. If Herbalife is above board, at the very least the world can put this drama behind it.
    12 Mar 2014, 07:23 PM Reply Like
  • wcz83
    , contributor
    Comments (179) | Send Message
     
    Please do it thoroughly, one time off. Long HLF
    12 Mar 2014, 07:47 PM Reply Like
  • Francis Ang
    , contributor
    Comments (155) | Send Message
     
    Excellent News from FTC. The begin of MOASS.
    12 Mar 2014, 08:16 PM Reply Like
  • c5966
    , contributor
    Comments (130) | Send Message
     
    Either HLF makes money from selling product - rather than from recruiting new members - or it doesn't.

     

    Which is it?
    12 Mar 2014, 11:35 PM Reply Like
  • Dan H.
    , contributor
    Comments (17) | Send Message
     
    The only reason people buy the product is they are recruited.
    12 Mar 2014, 11:47 PM Reply Like
  • Mikeproc
    , contributor
    Comments (43) | Send Message
     
    "The only reason people buy the product is they are recruited.”
    This comment is indicative of the ridiculous misinformation that is touted about Herbalife. It is wrong, wrong, wrong. I have sold almost $2 million worth of Herbalife products personally to customers/end users.
    Please just stick to facts. Enough rubbish.
    13 Mar 2014, 10:57 AM Reply Like
  • c5966
    , contributor
    Comments (130) | Send Message
     
    Only close to $2 million? For a minute there, I thought you were going to say you were pushing the $10 million dollar mark!
    18 Mar 2014, 06:39 AM Reply Like
  • The Stock Stooge
    , contributor
    Comments (359) | Send Message
     
    World will be a better place if the FTC shuts them down (or enforces proof of actual retail sales, which will have the same effect).
    13 Mar 2014, 12:32 AM Reply Like
  • Sierra Monolith Investments
    , contributor
    Comments (237) | Send Message
     
    eBay and Amazon are the primary cloud venues through which consumables are sold. Brick and mortar vs mlm is arbitrary to this trend. Herbalife has a competitive supplement line. As a supplement consumer and health advocate, I am impressed with their options. Herbalife24 is legit. Cloud sales will stifle downline growth as the commodity price converges on wholesale cost. The FTC May fine them for trumpeting recruitment, as their consumables are clearly popular. Brand awareness is marketing, herbalife has been doing well in the global market.

     

    These are nutritional supplements for healthy living. Cloud trumps brick and mortar, and herbalife is winning.

     

    A 1 year FTC investigation is good. GLTA
    13 Mar 2014, 12:44 AM Reply Like
  • satyr
    , contributor
    Comments (1324) | Send Message
     
    I have no opinion about HLF and have never owned or shorted the stock.

     

    Ackman, I can't stand, because he's a loudmouthed, pompous SOB. That doesn't make him right or wrong about the company. It just makes me want him to be wrong.

     

    The FTC investigation would likely have never happened on its own. I suspect that Ackman has influenced them, directly or indirectly. We've seen the same thing with other short attacks.

     

    For instance, because of an orchestrated short attack on LINN Energy, the SEC did an informal inquiry that resulted in nothing, but caused irreparable damage to shareholders due to the influence on the pending acquisition of Berry Petroleum.

     

    The moral of the story? The government, as always, is up for sale to the highest bidder.
    13 Mar 2014, 02:39 AM Reply Like
  • Ron Reed
    , contributor
    Comments (319) | Send Message
     
    "The moral of the story? The government, as always, is up for sale to the highest bidder."

     

    AMEN!

     

    No dog in this race either, but rather humorous to watch from the sidelines. As with all improbables the emotional ties are down right slap-stick. That applies to both sides!
    13 Mar 2014, 07:49 AM Reply Like
  • 50 cent it is
    , contributor
    Comments (1461) | Send Message
     
    Sen Markey is being charged with ethics violations in the senate for his part in the herbalife slander
    Couldn't happen to a nicer guy
    Ackman,you are next
    There will be consequences
    18 Mar 2014, 09:56 AM Reply Like
  • JimboWHO
    , contributor
    Comments (82) | Send Message
     
    This is laughable. His opponent is complaining about this - you file such a complaint if you wanted to.

     

    I can't stand Markey for a lot of reasons but he's blameless in HLF incident.

     

    JJM
    4 Apr 2014, 09:58 PM Reply Like
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